Does Party-System Fragmentation Affect the Quality of Democracy?

Is the quality of democracy undermined or enhanced by party-system fragmentation? Addressing this question would help us better assess normative claims about electoral reforms. Yet, doing so is difficult because of endogeneity issues: party systems are endogenous to many other dynamics in a polity. We overcome this problem by putting forward an instrument for the number of parties in a system, based on the level of fragmentation added by parties that narrowly make it to parliament. We then test the effect of party-system fragmentation on the quality of democracy, drawing upon an extensive battery of outcomes. Against previous literature, we find that a higher number of parties leads to more fractionalized governments, but has no impact on other democratic outcomes. Subsample analyses suggest that fragmentation may have some effect in contexts of very high polarization, but we find no effect in other theoretically meaningful subsamples. Our results indicate that party-system fragmentation may have fewer normative implications than previously assumed.